Assisted living investing

9 Replies

Hey! Long-term/short-term investor here! Possibly acquiring an assisted living facility with a financial partner and looking for someone who is experienced in the assisted-living-investing market who may be willing to answer some of my questions. Do you know of someone, or have any general advice on this? I’d love to hear from you!

@Arianne Hellewell I know a little about the developmentally disabled who have to be staffed 24/7. Not sure if that is the same market you are going for but might have a little insight depending on what questions you have. I don’t invest in the property, I work with them and know some about the inner workings of the company. We have about 50 houses and 1100 staff.

All I can tell you is they are getting pounded right now because of Coronavirus. I have seen some shut down even in high growth areas. Kids have taken the parents out worrying and the centers have trouble getting new people in and ongoing costs have risen as well creating a double whammy affect.

Sure some of them are still doing okay to good you just have to be very careful with that product type right now.

@Arianne Hellewell

Are you talking about purchasing or building an assisted living facility and (1) leasing it to an established, large assisted living operator on a triple net lease basis, or (2) same as above except leasing it to a small mom and pop operator, or (3) operating it yourself?

I owned an Assisted Living facility in Palos Verdes California in a high-end neighborhood. The facility had 20 beds and I was collecting $10,000 per bed, or $200,000 per month and was after all expenses was making only a few thousand dollars per month.

Personally, I thought it was the most-horrible business in the world. May people who get into the assisted living business don't do the math beforehand and they don't realize how difficult it is to hire and maintain a number of qualified workers that can work 24/7 365 days and you can get sued bigtime when something bad happens to someone because you are understaffed. The legal requirements by several government agencies and numbers of inspectors from different agencies is mind-boggling. I had to spend about $250,000 to upgrade an existing fire sprinkler system. I had to spend about $300,000 to upgrade bathrooms and almost every door in the building to make everything ADA compliant. Many clients have special nutritional needs. Many need assistance taking medications and now you have some serious risks for multi-million lawsuits.

Some of the two biggest problems with an assistance living facility is dealing with relatives who want to beat you to death because their feeble relatives in your facility love to complain about the way you do or don't treat them and the next biggest problem is living facilities are notorious for getting sued. Almost every living facility gets sued multiple times for something and if you don't believe that then you had better start doing some more research on the internet.

It is very difficult to deal with elderly people. They complain about everything 24/7. Many of them poop all over themselves and they poop all over the toilet and you need people who can clean after them, or you will hear from their relatives and the way they talk to you it is very difficult to bite your tongue and maintain good composure.

It sounds cool to have a house with a lot of rooms and fill them up with clients who pay a few thousand dollar per month for each room, but the costs for dealing with all the legal requirements and to pay the staff can put you into bankruptcy real easy. 

One more serious problem is the turnover. Most clients stay for a short period due to their cost to stay at your facility and you are CONSTANTLY looking for new clients. It is difficult to find clients because you cannot complete with the price you charge because your clients can usually pay less than you charge to live in large facilities with beautiful buildings, swimming pools, club houses, professional nurses, physical therapists, nutritionists, larger and better kitchens and better food than you can offer.

Even for the apartment buildings I own, every month or two I lose a tenant to a large assisted living facility. I have a 93-year old tenant who sent me a notice that she is moving by August first to move to an assisted living facility and you can bet it is one of those large ones that have 100+ rooms.

Hi @Arianne Hellewell . I would never buy and/or operate a faculty with stakes this high without training, experience and a team.  I’d recommend going to (say) a weekend training on RALs as a first step.  Then you’ll have some basis and info and access to resources to valet started.  Good luck!  

Listen to those below.  A licensed assisted living facility is different than a residential living facility.  This is a real business, which requires a legit licensed and seasoned operator.  Staff is getting difficult to find, your expenses can be astronomical, and your liability is through the roof.  I wouldn't touch a facility with less than 40-60 beds with a 10 foot pole.  Source, I am a licensed multi-level administrator and currently oversee 5 buildings.  

Originally posted by @Logan Jamieson :

Listen to those below.  A licensed assisted living facility is different than a residential living facility.  This is a real business, which requires a legit licensed and seasoned operator.  Staff is getting difficult to find, your expenses can be astronomical, and your liability is through the roof.  I wouldn't touch a facility with less than 40-60 beds with a 10 foot pole.  Source, I am a licensed multi-level administrator and currently oversee 5 buildings.  

Do you work for a corporate outfit?  Every state calls/classifies different care facilities by different names - in KS we have SNF (Skilled Nursing Facility, Rehabilitation Center, ALF Assisted Living Facility - under the ALF umbrella - we have Residential Care Facilities and Home Plus as well -- all of them have their unique regulatory quirks.  

I like our business - but am there often - we have good people and I try to treat them well -- I hope to expand soon by building new or buying another existing business, or purchasing a building and remodeling (probably the least likely path).  

Anyways definitely not easy and I've been pretty lucky along the way - specifically with having good people around me.

It's a good way to end up in jail if you think it can be passively managed.  At the end of the day, you are holding the bag for any failings in standards of care.  It would require a LOT of knowledge to do right and humanely.